Making the Right Call: Charitable Planning Is Easier Than Football

Featured ArticleMarch 2015

Some sports commentators say that the decision of the Seattle Seahawks coaches to throw rather than run when the ball was one yard from a touchdown and a Super Bowl victory was the worst call in sports history. In life, as in sports, we sometimes make calls that turn out badly. We purchase a stock just before it plunges in value. We put our house on the market at the worst time. We pay big bucks for a vacation package that proves disappointing. We turn down one job offer and accept another, only to discover that it is a bad fit.

However, in planning your charitable gifts there are certain decisions that will almost always be the right call.

Use appreciated securities for large gifts

If you have owned securities for more than a year and they have appreciated in value, make your larger charitable gifts with them. You will receive a charitable deduction for market value, and you will avoid taxation of the capital gain.

If you own a security that has gone down in value and you are thinking of removing it from your portfolio by contributing it to charity, don’t do it. Instead, sell the security and contribute the proceeds. You will get the same deduction as if you gave the security, and you can claim the loss in value on your tax return.

Make end-of-life gifts with retirement funds

If you are planning an end-of-life gift, make that gift, to the extent possible, by naming our organization as a beneficiary of an IRA or other retirement fund. Distributions to us, unlike those to individuals, will not be subject to income tax.

Time your gifts for the maximum deduction

If you make large gifts regularly, time those gifts so that you do not waste deductions. In claiming deductions, current gifts have priority over carryovers and there is a five-year limit on carryovers.

People may second-guess you (or you may second-guess yourself) on many things—but probably not on these wise gift-planning strategies.